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U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission

LITIGATION RELEASE NO. 18799 / July 27, 2004

SEC v. Rick A. Marano, William Marano and Carl Loizzi, Civil Action No. 04 CV 5828 (Kimba Wood)(S.D.N.Y. July 27, 2004)

FORMER SENIOR ANALYST OF STANDARD & POOR'S FINANCIAL RATING SERVICES AND TWO OTHERS SUED FOR INSIDER TRADING IN RELIASTAR FINANCIAL CORPORATION AND AMERICAN GENERAL CORPORATION SECURITIES

The Securities and Exchange Commission today filed an insider trading action against Rick A. Marano, a former senior analyst in the Life Insurance Group ("Life Group") at Standard & Poor's Financial Rating Services ("S&P"), his brother, William Marano, and Carl Loizzi ("Loizzi"), a friend and former business partner of William Marano's. On two separate occasions, Rick Marano misappropriated material, non-public information obtained through his employment regarding proposed business transactions and tipped that information to William Marano and Loizzi. In total, the unlawful trading produced profits of over $1,100,000.

The United States Attorney's Office for the Southern District of New York, on the same day, announced criminal charges against Rick A. Marano, William Marano and Carl Loizzi. Rick Marano, William Marano and Carl Loizzi are charged with conspiracy to commit securities fraud and securities fraud.

The Complaint alleges that:

  • Rick Marano, as a senior analyst in the Life Group at S&P, owed a fiduciary or other duty of trust and confidence to S&P and its clients to keep confidential all non-public information he obtained in the course of his employment with S&P.

  • Nevertheless, in late April 2000, through his employment at S&P, Rick Marano misappropriated material, non-public information regarding a potential transaction involving ReliaStar Financial Corporation ("ReliaStar") and ING Groep ("ING"), and, on or about April 27, tipped that information to his brother, William Marano and/or Loizzi. Within seventy minutes of that tip, Rick Marano, William Marano and Loizzi all began purchasing ReliaStar call option contracts. The defendants purchased 410 of the 501 May 35 ReliaStar call option contracts that were purchased on April 27. Neither Rick Marano nor William Marano had ever before purchased ReliaStar options. The following day, April 28, before the public news release announcing ING's proposed acquisition of ReliaStar, William Marano and Loizzi both purchased additional ReliaStar call option contracts. Loizzi also bought 2,000 shares of ReliaStar common stock. Based upon news of the proposed acquisition, ReliaStar common stock closed at $44 per share on April 28, up approximately 42% from its opening price of $31.75. Loizzi, William Marano and Rick Marano reaped trading profits of approximately $596,000, $200,000 and $83,000, respectively, on their sales of ReliaStar securities.

  • Approximately one year later, Rick Marano again misappropriated material, non-public information regarding a potential acquisition and tipped William Marano and/or Loizzi. On April 2, 2001, Rick Marano learned of a potential acquisition of American General Corporation ("AGC") by American International Group ("AIG") when he and others in the Life Group attended a meeting at AIG's offices. The next day, April 3, after the tip from Rick Marano, William Marano and Loizzi purchased AGC call option contracts. Loizzi and William Marano purchased 606 of the 614 April 40 AGC call option contracts purchased on April 3. Neither William Marano nor Loizzi had ever before purchased AGC securities. Later that day, AIG announced its plan to acquire AGC. Based upon news of the proposed acquisition, AGC stock closed at $42 on April 4, up approximately 15% from its April 3 closing price of $36.80. Loizzi and William Marano reaped trading profits of approximately $253,000 and $20,000, respectively, on the sale of their AGC options.

In its Complaint, the Commission requests that the Court issue a final judgment of permanent injunction and other relief restraining and enjoining the defendants from violating the antifraud provisions of the Securities Exchange Act of 1934 ("Exchange Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission also seeks an order that the defendants disgorge their illegal trading profits with prejudgment interest and pay civil money penalties, pursuant to Section 21A of the Exchange Act.

***

The Commission's investigation that led to these actions was conducted in cooperation with the United States Attorney's Office for the Southern District of New York. The Commission also acknowledges the assistance provided by the American Stock Exchange and the Chicago Board Options Exchange.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/lr18799.htm


Modified: 07/27/2004